Are Home Warranties Worth the Money?
You’ve saved up carefully and you’ve done the impossible: You’re a millennial with a house. Not even a “truck you sleep in at the Google parking lot,” but an actual piece of real estate. Congratulations! Odds are there’s a lot you’re not prepared for. Because honestly? Nobody is ever really prepared for owning a home. There’s a whole host of new stuff in your life to worry about.
A lot of people turn to home warranties to take care of problems around the house. These warranties typically cover the cost of repairing appliances around the home—things like your sinks, toilets, refrigerator, washer and dryer, and air conditioning. (They don’t usually cover the house itself; that’s what your home insurance takes care of.)
A home warranty sounds like a great deal. If you’re an overwhelmed, first-time homeowner, it sounds like a great halfway step between having a landlord that takes care of things and suddenly being responsible for everything yourself.
But are you really getting everything you pay for? Eh…not usually. Here’s why.
You May Already Be Covered
Most states require builders to insure the actual, structural elements of the home for up to 10 years after building it, and most appliances come with at least a one-year warranty. That means that if you’re buying a new home, you’re probably already taken care of.
If you’re buying an old home, there might be some benefit, but the best situation to be in with a home warranty is to never pay for it. Get the seller to throw it in while you’re negotiating the home purchase, and ditch it after the first year.
The Fine Print Is Brutal
Most people just look at the big, friendly pamphlet of what the warranty covers instead of going over the fine print with a magnifying glass. Home warranties account for more complaints at Angie’s List than any other service for years upon years at a time.
Angie’s List asserts that most of their complaints stem from “misunderstandings” about what’s covered, but it’s not like these companies go out of their way to foster understanding before you sign off. These companies don’t inspect homes before they make warranties, so they hedge their bets with extremely limited coverage.
If a tree branch has grown into your plumbing, that’s a “foreign object” and not covered. If they think that your appliances haven’t been “properly maintained” (which is a massive gray area), you’re not covered. Even if your particular problem is covered, it might not be covered in full. If your boiler goes out, that sigh of relief at having a warranty can turn into a sigh of frustration when you learn they’re only going to cover a tenth of the cost.
Your Money Will Go Further On Its Own
You can pay a company to be a mediator, or you can write “HOME REPAIRS” on a sock in Sharpie and put $500 in it every year. Consumer expert Clark Howard maintains that in his 24 years of taking calls on his radio show, he’s never once heard anyone bring up their home warranty as a positive. He may not exactly be with me on the sock idea, but he does suggest putting $50 a month into a repair fund.
In his mind, the benefit of a home warranty comes when you’re trying to sell a home – it makes the house more appealing to buyers who are nervous about being homeowners. But don’t renew it, because if you can afford to do that, you can afford to save for repairs responsibly.
You Don’t Get To Pick Your Contractor
The home warranty company doesn’t care about making your house a home; they care about getting to the end of the year without spending the $400-$600 that you spend purchasing the warranty. That means they pick who does the work, and they aren’t going to hit Angie’s List looking for the cream of the crop. They’re going to find the cheapest dudes they can manage, who are willing to do enormous amounts of work for next to no money.
This can mean that the person who comes to look at your toilet might not actually even remove it to see it’s cracked on the bottom. He’ll tell you that there’s a “foreign object” in it, which isn’t covered by your policy. When you hire your own plumber, however, that good plumber will say, “there’s no foreign object here, just the slow buildup that happens over time, because this toilet is 30 years old.” (Not that we’re speaking from experience.)
When you call the warranty company back, the beleaguered person on the phone will tell you, in a voice that has lost all hope, there’s no point in calling their claims department anyway because…
They Will Do Everything To Avoid Paying Out
Get ready to learn all kinds of things about the inside of your plumbing, because the coverage will stop in incredibly arbitrary places. Get ready to be told that the leak under your sink is two inches away from where the warranty coverage stops. Get ready to be told that opening the front panel of the washing machine was an “improper repair” that invalidated your warranty, even though you did it hoping that it would be an easy fix that would save you and them money, and their repair guy was the person who showed you how to do it anyway.
By the time you’re done researching your appliances to build an argument against these jerks, you will have learned so much that you could just about repair these things yourself. In case this sounds like personal experience affecting judgment, consider this: The state of New Jersey filed a complaint against Choice Home Warranty in 2014 for making it “difficult if not impossible for consumers to realize the benefits of their so-called warranties.” Choice Home Warranty is one of Reviews.com’s “top picks” for home warranties. If the best an industry can do is so pitiful that a government run by Chris Christie called them out for it, that’s a pretty dire situation.
If You’re Getting a Home Warranty, at Least Research It
If you’re in a situation where you’re shopping around for a home warranty, do your research. For instance, you might see that a company is accredited by the BBB, only to then see the part where it says, “BBB continues to meet with the company to determine if the number of complaints are unusual …” (Let’s also not forget that the BBB was once the subject of a pay-for-play scandal, and gave an “A+” rating to a Neo-Nazi website.)